Political Connections, Competition, and Innovation
Quasi-Experimental Evidence from Chinese Firms
Bibliographic Data
| ID | 5111605 |
|---|---|
| Authors | Lei Cheng (0000-0002-1237-0258, Wuhan University), Zhimin Li (0000-0002-1350-6022, Peking University) |
| Year | 2023 |
| Volume | 71 |
| Issue | 3 |
| Pages | 819-862 |
| Publication date | 2023-04-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economic Development and Cultural Change (JOURNAL) |
| Journal identifiers | ISSN: 0013-0079 • E-ISSN: 1539-2988 |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/716487 |
| OpenAlex | W3164806719 |
| Language | EN |
| Citations received | 4 |
| References cited | 56 |
This paper studies the causal impact of political connections on innovation. Using a unique hand-collected data set of sudden deaths of politically connected independent directors (i.e., retired government officials) in Chinese firms, we find that an unexpected loss of political connections increases a firm’s patent applications by 34% (14 patents). The innovation response is more pronounced in firms with stronger connections: when the connected directors held higher-level bureaucratic positions or when firms operate within their geographical jurisdictions. Upon losing political connections, firms face higher competitive pressure and divert resources from rent seeking into innovation investment. Our findings highlight the role of competition in the substitution between political connections and innovation, particularly in settings where formal institutions are weak
Bureaucracy · Business · Competition (biology) · Economics · Face (sociological concept) · Government (linguistics) · Industrial organization · Investment (military) · Market economy · Political science · Politics · Rent-seeking · Sociology · Corporate Finance and Governance · Economic Growth and Development · Political Influence and Corporate Strategies
Political Order in Changing Societies
Innovation and Institutional Ownership
The value of connections in turbulent times
Law, finance, and economic growth in China
Busting the “Princelings”
Do Political Connections Buffer Firms from or Bind Firms to the Government? A Study of Corporate Charitable Donations of Chinese Firms
Estimating the Value of Political Connections
Politically Connected Boards of Directors and The Allocation of Procurement Contracts
Betting on Hitler—The Value of Political Connections in Nazi Germany
Friends with benefits
Politically Connected Firms
Political connections and preferential access to finance
Why Is Rent-Seeking So Costly to Growth
How does anti-corruption affect corporate innovation? Evidence from recent anti-corruption efforts in China
Eat, Drink, Firms, Government
The Political Resource Curse
Technical Change and the Aggregate Production Function
Political connections, financing and firm performance
Competition and Corporate Performance
Endogenous Technological Change
The Performance of State-Owned Enterprises
Economic Development Through Bureaucratic Corruption
| Unique citing works | 4 |
|---|---|
| Citations per year | 2 |
| Citation span | 2024 - 2026 (3) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 4 |